AWS price reduction for data transfers out to the internet

https://aws.amazon.com/about-aws/whats-new/2021/11/aws-price-reduction-data-transfers-internet/

by eranation • 5 years ago

164 150 5 years ago

aws.amazon.com

rvz• 5 years ago

Is this a Cloudflare sell signal?

yellow_lead• 5 years ago

I would say no - this legitimizes them as competition. Otherwise, there'd be no reason for the change.

dsizzle• 5 years ago

Are there any other examples where an incumbent lowering prices in response to competition was a positive sign for the incumbent?

I'm also trying to unpack "legitimize" to something more concrete... One possibility is that AWS's action is a signal of AWS customers' moving business to Cloudflare (that we wouldn't otherwise know about). Or perhaps it's simply AWS flinching and consequently customers perceive Cloudflare as more legitimate and move more business there?

encryptluks22• 5 years ago

Cloudflare seems to provide free egress. Cloud providers like AWS have been overcharging for some time. This seems more like a minor correction on behalf of Amazon than a sell signal for Cloudflare.

slownews457• 5 years ago

If you believe cloudflare egress is "free" I have a long list of "free" and "unlimited" services to sell you.

Cloudflare simply doesn't share egress pricing.

slownews457• 5 years ago

Issues with cloudflare

1) They do not have public egress pricing. That should be a red flag at this time.

2) They are currently LOSING a lot of money on their offerings - AWS makes a ton. That should be red flag #2.

DevKoala3• 5 years ago

They are doing R&D atm that’s where the investment is going. The Cloudflare TAM isn’t static, it keeps growing.

viraptor• 5 years ago

They are currently LOSING a lot of money on their offerings

This is not interesting without more context. If they lose money because their income is below costs, that's a problem. If they lose money because they have headroom and spend all of it on customer acquisition, that's an opposite of a problem.

DevKoala3• 5 years ago

Nothing further from that. This is the best AWS can scramble in the near term as they continue seeing a decreasing trend in customer acquisition rate for the sector in which Cloudflare is predating them.

slownews457• 5 years ago

Cloudflare has $20M in revenue growth in last quarter.

AWS had growth of $1.2B in last quarter? I think AWS is still hitting something like 30%+ revenue growth YoY even though they are already huge?

With this size / scale, AWS should be able predate someone like cloudflare on base pricing.

I do think cloudflare may be able to evolve their products faster given they aren't carrying around x billion of recurring revenue.

xwdv• 5 years ago

No, the opposite actually. Cloudflare’s offering is still better, and AWS failed to come up with a good response to it. Make no mistake, if you are a company of any significance this discount is weak.

putlake2• 5 years ago

This is a great question, and I don't know if the answer is as clear cut as the "No" responses here suggest. With 1TB free, Cloudfront has now removed the incentive for AWS customers (those who use EC2 or S3) to adopt Cloudflare's free or even $20 tier. While Cloudflare doesn't make much money off these customers, it's how their network learned and grew. 1TB is more than enough for a lot of applications.

KptMarchewa2• 5 years ago

Unless I'm blind, it's not a price reduction, but free tier expansion.

jacurtis• 5 years ago

Yes it is really just a free tier expansion. But many sites today would essentially be able to completely live under the free tier for the foreseeable future, who were previously paying for it. Which I guess makes it a price reduction. Even a company with 2Tb of egress traffic would now only pay for 1Tb instead of 1.95Tb. Which makes it nearly a 50% price reduction.

So I guess... it depends how you look at it.

aledalgrande• 5 years ago

Doesn't free tier last only 12 months?

newaccount742• 5 years ago

And if you need 100TB of bandwidth it's a 1% discount.

My guess is that the majority of their revenue is coming from a few big customers, for whom this is not a relevant discount at all. I thinkt that they are introducing this offer to get developers to adopt AWS for small projects, hoping that they'll then use the same service they are already familiar with for big projects.

qeternity• 5 years ago

I don't think this is Amazon's intention. AWS does not make its money from SMEs.

This is about courting developers. If Cloudflare is going to make it free to play with all their tools, and only start charging when usage becomes "real" then they have a good chance of winning over the dev community. AWS can't let that happen, because they know then the enterprise rot will start.

oconnore• 5 years ago

You can imagine that the conversation went something like:

“Hey, look at Cloudflare, should we reduce egress costs?”

“Absolutely not, but let’s make a free tier change and hope that fewer people hassle us about that”

It’s a signal that they’re digging in on the price structure.

staticassertion• 5 years ago

Agreed. They likely see Cloudflare as targeting customers with lower requirements than AWS customers, and so to compete with them they can just extend their free tier while assuming that as companies grow they'll exceed that tier.

For high volume customers this isn't going to make a huge difference. For many who were considering Cloudflare, it could mean their service is now free.

missedthecue3• 5 years ago

It's vendor lock in.

"Hey should we build our company on cloudflare? Their egress cost is cheaper"

"No, AWS has far more features and besides, we get enough bandwidth for free because we're a small startup"

Fast forward 5 years, your company has grown and is buying a 10 terabytes a month of egress, but you can't switch platforms now, you're too far dug in and integrated with AWS.

notatoad2• 5 years ago

seems like a pretty pedantic difference, given that the expansion is to all customers.

if you pay for outgoing bandwidth on AWS, your bill will go down. that's a price reduction.

ComputerGuru• 5 years ago

Non linearly. It’s like saying $5 off anything from a turkey wrap to a Lamborghini.

acdha• 5 years ago

You get more free GB but once you do they’re at the full original price. Busy sites won’t see any meaningful reduction in their bills, and smaller sites we’ll need to be mindful of this as they grow. Another way of looking at this is that they’re giving up the first $8.50/$85 of egress charges but only that first part — if you’re paying substantially more, that’s how much your bill is going down.

What it does do, however, is favor their CDN over the competition. If you use Cloudflare, Fastly, Akamai, etc. you used to pay roughly the same egress rate as a CloudFront customer, but now you hit the free tier limit 10 times faster.

ms512• 5 years ago

That is what it looks like. This news post appears to mostly restate another post Amazon made describing the free tier changes a few days ago [1] which was already discussed on HN [2].

[1] https://aws.amazon.com/blogs/aws/aws-free-tier-data-transfer...

[2] https://news.ycombinator.com/item?id=29332207

newaccount742• 5 years ago

Yeah, they are basically charging $100/month less than before. If you need less than a TB of bandwidth, this is a good deal since you pay nothing.

Just hope you don't get over a TB, or it's going to be expensive quickly!

For big customers this is not going to make any difference at all.

Retric• 5 years ago

Yes, it’s setup to be a very rude awakening due to how spiky bandwidth ends up being.

What’s interesting is they view this as a way to increase profits instead becoming slightly more competitive by reducing what they charge per TB of bandwidth.

c0balt• 5 years ago

Isn't free tier a price reduction model, with market capture/ marketing as a goal, anyway?

tootie• 5 years ago

This is probably a savvy move in that it's basically a huge price break for small and mid-size enterprises (my CF bill could drop from like $3K to near zero). The big players with those $10K, $100K, or whatever per month won't get a significant cut here. But I'm also guessing that those small and mid-size customers are exactly Cloudflare's main sales funnel. Their entire existence is based on giving inexpensive power tools that can be configured instantly. Anyone spending >$10K/mo on egress is more likely already set on AWS as a strategic vendor, have a multi-year lock-in deal and are more likely using the pro-level tooling you can get in Cloudfront. They are far less likely to unwind a giant pile of infrastructure for small cost savings anyway.

jsnell• 5 years ago

Discussed 2 days ago:

https://news.ycombinator.com/item?id=29332207

roca• 5 years ago

Thanks Cloudflare!

top_post• 5 years ago

This right here.

john37386• 5 years ago

It sounds like a nice move to start increasing competition on bandwidth out by cloud providers. Let's see if the market will follow. Indeed, it doesn't change much for big players, but it is a lower monthly/yearly bill for the startups and smaller players. Bandwidth out was always the small asterisk that most people forgot to estimate and/or read properly in the contract. Don't underestimate your bandwidth out from your cloud provider in your business plan. It can really go out of control quick.

danols• 5 years ago

I don't understand how it is possible in a functioning market economy to have 8000% markup on a utility product like bandwidth. Seems more like an oligopoly where a few big actors with a big moat has agreed to keep prices inflated. How can a sustained 8000% markup for a product like bandwidth not be considered price fixing?

source: https://blog.cloudflare.com/aws-egregious-egress/

missedthecue3• 5 years ago

Because bandwidth isn't the only AWS product, but you can't buy bandwidth for cheap from XYZ Inc. and connect that to your AWS account. That's not technically possible, you have to buy it from AWS.

So instead of using the cheapest vendor, companies use AWS for a ton of reasons (broad support, everyone knows how to work with it so it makes recruiting easier, hundreds of features, etc...) and their high bandwidth bill is worth it.

Aicy• 5 years ago

This is like going to a supermarket and complaining that the plastic bags for you to store your shopping in cost 10 cents which is a 8000% markup, as if plastic bags are why you're in a supermarket

georgyo• 5 years ago

This is a horrible example that doesn't not apply cleanly.

To fix it, let's change it from buy per bag to per gram you want to leave the store.

So your canned soup costs at least 3 times more to leave the supermarket then in cost to buy it than to eat it in the supermarket.

This is not even an exaggeration. s3 is 0.024/GB and egress bandwidth is 0.09/GB

slownews457• 5 years ago

1) $50/TB is not insane pricing relatively. I used to pay something like $3/GB (way back) which would be $3,000/TB. There are still plenty of folks charging high rates.

2) $50/TB may not be a big part of some customers bills. If it is on cloudfront you drop to 0.02/GB or $20/TB for larger volumes.

3) AWS doesn't charge separately for some services that wrap around networking. Their nitro instances have a pretty good networking story.

4) Especially with this new free tier on cloudfront, a fair number of users will never hit 1TB per month (free) data.

api4• 5 years ago

It’s absolutely insane compared with what bare metal providers charge.

bluedino2• 5 years ago

How much margin do you think there is in coffee or soft drinks?

rad_gruchalski2• 5 years ago

Apparently nowhere near the 8000%. After https://www.profitableventure.com/income-soda-retailers-marg...:

Restaurants and bars have around a 70% profit margin on a bottle of soda and soft drink, while retailers typically have between 30–50%.

netwo233gur• 5 years ago

The Cloudflare blog post really only looks at wholesale cost of bandwidth and compares it to the price AWS charges. But I think it's missing a huge component of all of the magic that happens inside AWS between those two things.

I've seen some of the inner workings of the big cloud providers' networking stacks. The networking infrastructure, the software that runs it, the software that exposes it to customers, the thousands of engineers working at any given moment in AWS/GCP/Azure's NOCs to maintain uptime are truly some of the most impressive technical marvels I have ever seen. They aren't as sexy to discuss on HN as something like the managed containers services, functions as a service, EC2 etc, but the networking stacks like the VPC, NAT gateways, subnet routing, privatelinks, security groups, ENIs, nitro cards, etc are pure magic as far as I'm concerned and are so so so much more complicated than a standard data center's networking stack, or even Cloudflare's stack.

To use Cloudflare's "bucket of water" metaphor, AWS isn't even close to just being a dumb bucket of water that you fill with water and then get charged to take out the water. There is so much that happens inside of that bucket to segment your water into different pipes, routing your water in all kinds of customer-customizable ways for many different use cases, mixing/heating/cooling your water as you need, all while guaranteeing things like making sure your water arrives exactly where it is supposed to arrive and doesn't get contaminated or leaked along the way.

Does AWS make a big markup on bandwidth? Yea, surely they do. But is it as simple as Cloudflare says it is? Not even close.

VectorLock2• 5 years ago

It's weird to me how people think contrasting a raw pipe billed on 95th percentile to a service like S3 or Cloudflare is in any way a fair comparison.

starfallg2• 5 years ago

It's not really that much magic. It's just a variation of EVPN-VXLAN plus smart NICs that segments and directs the traffic. Then they have normal VM hosts or nowadays devices with ASICs that handle the GW and NAT functionality.

lewisl90292• 5 years ago

Yes, their network stacks are definitely complex and cost a lot to maintain, I'm sure. But that doesn't necessarily make it a good deal if the customer isn't able to derive enough additional value from all that complexity. In fact it makes the offering less attractive if the complexity isn't sufficiently abstracted away and distract from product work or if their abstractions are leaky.

Recently I've been working with https://fly.io/ for a new app and it's a breath of fresh air compared to working with the big cloud providers. They offer simple but robust networking primitives built on top of ipv6 and WireGuard and provide a ton of value add on top like global distribution & load balancing, service discovery, TLS termination, all of which just work exactly like I'd expect it to, out of the box without any configuration on my side.

EDIT: Almost forgot to mention: their egress costs are also much more reasonable: https://fly.io/docs/about/pricing/#outbound-data-transfer

mythz4• 5 years ago

https://www.hetzner.com/cloud gives you 20TB bandwidth for €3.49/mo VMs, which I've essentially regarded as Hetzner gives unlimited free bandwidth for all servers.

Being lynched for egregious egress fees is only something I've experienced when using mega corp's clouds, where economies of scale suggests their vastly larger size should allow them to provide even better value.

But that's in a normal market, not the artificial lock-in mega cloud corps enjoy where they're able to distort customer behavior from artificially high pricing.

jollybean3• 5 years ago

TOC 'Total Cost of Ownership'.

Nobody is paying for egress, they are paying for everything else.

AWS is focused on corporate IT so egress was always a secondary thing for them.

It might actually be more profitable for them to have uber-markups on that egress then to serve the web space that requires cheap bandwidth.

VectorLock2• 5 years ago

Its not 8000% on a markup on raw metered bandwidth, they're serving data from a service they operate. Comparing acting like they're just "marking up" bandwidth is an unfair comparison.

spoonjim2• 5 years ago

AWS is a luxury product and the outbound charge is the delivery fee. You will also find that the delivery fee for a Louis Vuitton bag is more than for a pizza.

tw04• 5 years ago

AWS spent the first decade of existence advertising to executives as a way to significantly decrease their cost of IT, not as the Louis Vuitton of IT.

jollybean3• 5 years ago

No, it's a very valuable tool for corporate IT.

The egress is a way to snare a lot of extra margin.

It's 100% clear that orgs. wanting to host large public platforms will have 'major concerns' over this pricing issue but that's not their target market.

I'll bet most HNeers are thinking in terms of 'Hosting my App' there vs. AWS Bread and Butter is mostly hosting corporate IT services, which is a different thing.

throwaway984393• 5 years ago

What do you mean, how is it possible? That's how markets work. You open a booth in the market, and you can ask any price you want. You can ask for a nickle or a million bucks. There's no rule about how much money you can ask for.

As for your assertion that there's a price fixing conspiracy, who do you imagine they're colluding with? What other company do you find charging these prices?

adventured2• 5 years ago

The parent comment misunderstands that most of Amazon's customers are very clearly not extremely concerned about the bandwidth costs (even if they'd all happily receive a lower bandwidth bill from AWS). They're not there for the cheap bandwidth. That's the central flaw in the parent's bafflement about markets, they did a exceptionally flat appraisal of the AWS value proposition, as though AWS isn't a gigantic business of many dozens of service offerings which act as a customer magnet and retention mechanism.

amluto• 5 years ago

Because AWS doesn’t actually want to collect the egress fees. They want you to avoid egress entirely for high-value services, which has all kinds of excellent implications for AWS:

Third party SaaS offerings that move large amounts of data are effectively forced to host in AWS.

Want a small number of high-value servers (e.g. big GPUs, etc) in your own data center or colo to use for non-availability-critical purposes integrated with the rest of your AWS stack? You’d better price in egress!

Want to gradually transition to a competing cloud? Good luck, egress will bankrupt you before you finish the transition.

colordrops• 5 years ago

That still sounds like price fixing, but for a different purpose.

StopHammoTime• 5 years ago

amluto is spot on. AWS don't want to make money off of egress, they want to make it non-viable to move anything out of AWS that isn't being served to an end consumer.

torginus• 5 years ago

I wonder, if you made a video streaming app on top of AWS you could negotiate a significant reduction of fees, since you're not ruining their business by transferring out valuable data to competitors. And if that's the case, I wonder if that constitutes a breach of net neutrality in practice, since in practice, a major part of bandwidth costs will depend on what kind of information you are transferring.

dwild2• 5 years ago

Want to gradually transition to a competing cloud? Good luck, egress will bankrupt you before you finish the transition.

They do offer the Snowball to lower transfer out cost, they also offer Direct Connect which is more convenient and can be cheaper.

For sure it won't be cheap, but being able to transfer 100 TB for less than 3k isn't too bad. Storing that on S3 would cost you nearly that per month... if you can't spare a month of cost to migrate, you may want to rethink your pricing.

adam_arthur• 5 years ago

The thing about a competitive market is that it requires that cost of switching is low. The higher the cost of switching, the more leverage the company has over you.

SaaS and cloud providers in particular have a lot of leverage over their customers due to the typically high cost of switching. E.g. what does it cost to move your whole infrastructure to a new cloud? They can basically gouge you up to that cost threshold.

These cost of switching actually leads to a market that is not competitive in the traditional sense. Yes, competition on the surface, but monopoly within.

It's true that gouging can't be as egregious as a true monopoly environment, but certainly much higher than a low cost of switching environment.

The big tell is margins. Anytime a company can sustain excessively high margins, it's usually a tell that theres a lack of a competitive market. A lot of software companies get high margins either by being first to market (by many years), or leveraging high cost of switching.

Despite software being cheap to deliver, it's also cheap for your competitors to deliver, so margins should be low in a highly competitive market, regardless of marginal cost of production.

I do believe new regulation is needed to handle these business models such that we can continue to foster a competitive environment. It would have to be very carefully crafted to prevent unintended second order effects of course.

butMyside• 5 years ago

So it is:

https://www.nytimes.com/2020/10/25/technology/apple-google-s...

I mean the politicians are in on it, and turn against them when their ability to control elections for their own purposes comes into question.

Look at the “testimony” of Robinhood guy. It’s a scripted TV show; you lose.

Aeolun• 5 years ago

They started feeling the squeeze from Cloudflare weren’t they?

numair• 5 years ago

A friendly reminder that, if you don’t like Amazon’s ethics in how they run their retail business, vote with your infrastructure dollars — that’s what’s paying for the show (well, that and their advertising business everyone ignores).

Amazon’s AWS margin is everyone else’s opportunity.

HatchedLake721• 5 years ago

Why do you feel you need to bring up Amazon retail, ethics and voting with dollars to a discussion about AWS data transfer price reduction?

xwolfi• 5 years ago

Another crazy idiot single issue person who think companies have souls, fear punishment and are coherent :D

Dude if you re sad you re paid a dollar too short in a warehouse, bullshitting about infra boycott will accomplish nothing, or at best, punish aws for something they cant control.

Build a competitor if it s so easy to do the warehousing ethically, and you might even end up having amazon contract you if you re brilliant and cheap.

slownews457• 5 years ago

"The CloudFront free tier is a full-service free tier, meaning customers can use all CloudFront features, such as support of website images, media workloads, and APIs, without service restrictions or data type limitations."

That's a pretty direct dig at cloudflare with their service and data type limitations :) So this does seem pretty cloudflare targeted.

flatiron• 5 years ago

Cloud flare is the snowball coming down the mountain at them. Why not try to take a dig?

You think they would be lowering their cost if it wasn’t for R2 or whatever they call it? Of course not!

eins1234• 5 years ago

And to be fair it's not a bad point. AWS and CloudFront is not without it's problems, but every time I've tried to build anything non-trivial with Cloudflare's CDN I've found that some table-stakes feature turns out to be locked behind a $5000+ enterprise plan, with no option to pay a more reasonable price for just the feature itself and associated usage.

I've come to the conclusion that Cloudflare's CDN is only really worthwhile if I'm building something tiny and basic that will never conceivably need any of their enterprise features (and I've turned out to be wrong about this down the line on many occasions, so YMMV), or something super ambitious where I'm willing and able to go all in on the enterprise plan and hope that eventually economies of scale on egress costs will kick in and turn it into a good deal. That leaves a giant gaping hole in the middle where it makes more sense to go with a different CDN like Cloudfront or Fastly where the bandwidth isn't free, but advanced features are included or charged on a usage basis (these days most of my projects fall into this category).

Karunamon• 5 years ago

This is a pretty big change for smaller players. AWS region free outbound tier is now 100GB instead of 1GB, and more importantly, the free tier is perpetual.

mcherm• 5 years ago

Cloudflare, my hero!

[1] https://blog.cloudflare.com/introducing-r2-object-storage/

gautamcgoel• 5 years ago

It's almost as if competition leads to lower prices for consumers! Who could have known?

zozbot234• 5 years ago

Free data egress out of AWS is a fairly big deal, since egress costs were formerly the main bottleneck which made using AWS impractical for all sorts of heavy compute/number crunching. It will be very interesting to see how these scenarios are affected.

putlake2• 5 years ago

afaik Cloudflare prioritizes its paying customers over those on the free tier e.g. when there are limited resources at a POP. It's not clear whether Cloudfront will do the same -- does anyone know?

tuananh• 5 years ago

this is barely an answer to cloudflare. aws still has a lot to do

linsomniac• 5 years ago

Coincidentally enough, on Monday I had a call with my AWS account rep, she was asking what plans we had for the next year. I told her that we were evaluating some of our spend to see if there were places we could economize, but our biggest plan was to move from S3+Cloudfront to Cloudflare R2. "Have you heard of R2?" "No, I'll check with one of my S3 engineers and get back to you."

Sounds like SOMEBODY over there is trying to address the Bandwidth Alliance announcement.

koolba• 5 years ago

This is massive. A 1TB outbound allowance will cover just about every non profitable use case. This means that a minimally sized t4.nano can operate for peanuts without an unknown component.

rgun• 5 years ago

The 1TB allowance is only for Cloudfront. For general data egress (from ec2, directly from S3), it is just 100GB.

_hyn32• 5 years ago

And also every other smaller cloud provider provides at least 1TB of free transfer (OVH, Hetzner, Vultr, Digital Ocean, etc).

Even AWS's own Lightsail (which is so throttled that it's a far inferior solution to most of the other VPS/"cloud" providers) includes at least 1TB of transfer for free.

https://aws.amazon.com/lightsail/pricing/

_hyn32• 5 years ago

In almost every case, inter-account and inter-AZ transfer will incur the same pricing as egress, especially if it travels through an IGW.

In our internal testing, it appears that AWS often applies the egress pricing twice, both when leaving the AZ where your instance(s) are located as well as again in the region where your customers are, after traveling through the AWS internal network; the first is an inter-AZ transfer, and the second is the actual egress from AWS' network.

So, it appears that the egress fees are nearly always not merely the oft-cited 8,000% greater than competitors, but twice that. AWS is not very transparent about this.

Understatement of the year: "Data transfer charges are often overlooked while architecting a solution in AWS."[0]

0. https://aws.amazon.com/blogs/architecture/overview-of-data-t...

nikprasad• 5 years ago

IMHO this doesn't make a difference whatsoever. We used to run a cloud gaming company and you burn through your first 100Gb within no time. Applications where data transfer is >50% of your cost is not sustainable and by giving the first 100Gb free they're not really making a dent on cloud costs. They're still charging an insane amount for data and the worst part is the pricing is almost similar across regions where Tier 1 networks might not actually charge AWS that much. it's a total rip off. In our desperate search for cheaper services, we actually checked out Linode (I don't work with them in any way) and found their egress costs a lot more palatable.

plasma• 5 years ago

This isn’t a reduction at all?

It’s introducing more free tier, but once you blow past that, the costs add up again.

tony2• 5 years ago

Cache invalidations are the ones that will really get you bad in CloudFront if you're not careful [1].

As a new user, I was working on publishing open source documentation via CloudFront (https://tmuxp.git-pull.com) and made a mistake of invalidating '*', and doing it every time I pushed to CI. This was sphinx-doc, so no cache-busting filenames.

My bill was absolutely enormous. I chewed threw the free tier credits.

If CloudFront ever gets more generous with invalidations, that'd help reduce the sting for those of us that make those early mistakes.

[1] https://docs.aws.amazon.com/AmazonCloudFront/latest/Develope...

sofixa4• 5 years ago

Pro tip : for such scenarios (push static documentation), services such as Netlify, Cloudflare Pages, Firebase Hosting are preferable. Their costs are lower, free tiers are highly generous, and cache invalidation is handled automatically.

tony2• 5 years ago

I've tried AWS amplify and some cloudflare pages. I'm looking into some of those others for gatsby / next.js hosting.

For gatsby sites and webpack apps, I did ultimately figure out and simplify my s3 / cloudfront deploys and only invalidate index.html.

Ultimately it looks like I'm going to be migrating away to sphinx-doc. It's not up to date with the best practices in static site apps these days.

AWS price reduction for data transfers out to the internet

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